CHAPTER 1 INTRODUCTION TO MARKETING

What Is Marketing?
Simple definition:
Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably. (CIM,2001)

Goals:
1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction.

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Marketing Defined
Marketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

OLD view of marketing:

Making a sale telling and selling

NEW view of marketing:

Satisfying customer needs

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Why is Marketing Important?

Shifting Business Paradigms

Buyers markets Sellers markets

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The Marketing Process

A simple model of the marketing process: Understand the marketplace and customer needs and wants. Design a customer-driven marketing strategy. Construct an integrated marketing program that delivers superior value. Build profitable relationships and create customer delight. Capture value from customers to create profits and customer quality.

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Needs, Wants, and Demands

Need: State of felt deprivation including physical, social,
and individual needs. Physical needs: Food, clothing, shelter, safety Social needs: Belonging, affection Individual needs: Learning, knowledge, self-expression

Want: Form that a human need takes, as shaped by culture and individual personality. Wants + Buying Power = Demand

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Need/ Want Fulfillment

Needs & wants are fulfilled through a Marketing Offering: Products:
Persons, places, organizations, information, ideas.

Services:
Activity or benefit offered for sale that is essentially intangible and does not result in ownership.

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Customer Value and Satisfaction

Dependent on the products perceived performance relative to a buyers expectations. Care must be taken when setting expectations:
If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Customer satisfaction often leads to consumer loyalty.

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Core Concepts of Marketing

Need food ( is a must ) Want Pizza, Burger, French fry's ( translation of a need as per our experience ) Demand Burger ( translation of a want as per our willingness and ability to buy ) Desire Have a Burger in a five star hotel

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Who is a Customer ??
CUSTOMER IS . . . . .

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Anyone who is in the market looking at a product / service for attention, acquisition, use or consumption that satisfies

a want or a need

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1.1 MARKETING ENVIRONMENT

The Marketing Environment

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The Social Environment

The Social Environment: All factors and trends related to groups of people including:
Their number Characteristics Behavior Growth Projections

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The Demographic Environment

The Demographic Environment:

Refers to the size, distribution, and growth rate of groups of people with different characteristics.

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The Demographic Environment

Global Population Size and Growth:
The world population is now more than six billion. Approximately 95 percent of that growth took place in developing countries in Asia, Africa, and Latin America. China currently has the largest population, followed by India, with the United States a distant third.

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The Cultural Environment

The cultural environment refers to factors and trends related to how people live and behave and what they buy. Cultural factors include:
Values Ideas Attitudes Beliefs Activities of specific population subgroups

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Issues in the Cultural Environment

Cultural Diversity Changing Roles Emphasis on Health & Fitness Desire for Convenience Consumerism Popular Culture

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The Economic Environment

The economic environment includes factors and trends related to income levels and the production of goods and services.
Economic trends in different parts of the world can affect marketing activities in other parts of the world. Market opportunities are a function of both economic size and growth. The Gross Domestic Product (GDP) represents the total size of a countrys economy measured in the amount of goods and services produced.
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The Political/Legal Environment

The political/legal environment encompasses factors and trends related to governmental activities, specific laws and regulations that affect marketing practice.
The political/legal environment is closely tied to the social and economic environments

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Global Political Trends

International political events greatly affect marketing activities. The most significant global political trend is the war on terrorism. A second important political trend is movement toward free trade and away from protectionism.

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Global Political Trends

Benefits to Free Trade:
Countries with the freest trade had the highest GDP growth from 1990 to 2000. Free trade in a global economy requires the free movement of people, goods, and capital across borders.

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Legislation
Organizations must deal with laws at the international, federal, state, and local levels. U.S. laws directly affecting marketing typically fall into two categories:

Those promoting competition among firms. Those protecting consumers and society.

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The Technological Environment

Includes factors and trends related to innovations that affect the development of new products or the marketing process:
New-product development

How marketing activities are performed

New technologies spawning new industries

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The Competitive Environment

All the organizations that attempt to serve similar customers. Two types of major competitors:
Brand Competitors Product Competitors

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The Competitive Environment

Brand Competitors:
Provide the most direct competition, offering the same types of products as competing firms.

Product Competitors:
Offer different types of products to satisfy the same general need.

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1.2 MARKETING ETHICS

Ethics

Ethics are the moral principles and values that govern the actions and decisions of an individual or group.

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Laws
Laws are societys values and standards that are enforceable in the courts.

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ETHICAL ISSUES IN MARKETING

Marketing ethics Marketers standards of conduct and moral values. Many companies create ethics programs to train employees to act ethically.

Employees personal values sometimes conflict with employers ethical standards.

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ETHICS IN MARKETING RESEARCH

Invasion of privacy (e.g. obtaining research data without permission) Stereotyping drawing unfair or inappropriate conclusions

ETHICS IN PRODUCT STRATEGY

Example: Package strategy.

Larger packages are more noticeable on the shelf.

Oddly sized packages make price comparison difficult.

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ETHICS IN DISTRIBUTION
For example, pressuring vendors to buy more than they need and pushing items that will result in higher commissions are temptations. Influence vendors to reduce display space for competitors' products, promising shipment when knowing delivery is not possible by the promised date, or paying vendors to carry a firm's product rather than one of its competitors are also unethical.

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ETHICS IN PROMOTION Issues over truth and honesty Issues with violence, sex etc Controversy Negative advertising ETHICS IN PRICING Price fixing Price wars Price collusion (agreeing with other competitors to set prices in a market to the detriment of competition and consumers)

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SOCIAL RESPONSIBILITY IN MARKETING Taking responsibility : marketers need to take responsibility for their products and their decisions. Dealing fairly : marketers need to be honest and fair in their dealings with all stakeholders.

Respecting consumer rights : including the right of redress, the right to information and the right to privacy

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MARKETINGS RESPONSIBILITIES
Marketing decisions must involve consideration of general well-being and even potential global effects. Some organization help promote social causes or practice socially responsible investing.

MARKETING AND ECOLOGY

Ecology is the study of the relationship between natural things and their environment.

Protection of the environment influences all areas of marketing decision making.

Marketing system produces billions of tons of packaging materials annually.

Green marketing Production, promotion, and reclamation of environmentally sensitive products.

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1.3 MARKETING MIX (4 PS)

 4 Ps stand for
Product Price Place Promotion

A mix of the four is necessary to sell a product

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The Marketing Mix

Think of a Cake All cakes need 4 things flour, egg, sugar, milk However, you can play with the flavour of your cake by changing the ingredients slightly
Example: Sweeter cake add more sugar

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The Marketing Mix

The same thing is true with the marketing mix You can very the type of message you are sending out about your product/service by mixing different elements of each of the Ps Example: Want to be seen as a luxury item make the price high, have limited selection

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Product
Refers to the benefits of buying a product
What need does the service/product fulfill Quality
What will the quality of your service/product be? Some people really want quality (Ferrarri) vs. others that dont really matter (kedai mamak)
How will your product/service differ from the competition What will you do differently? How is it going to look? Consumers often will purchase because it looks cool

Features

Design

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Product
Packaging if your selling a product what image will the packaging communicate?
If a service how will the appearance of your operation communicate an image about your business

Range of Products what complimentary products may you offer

If service: Will you offer other products with your service Example: Moose Winooskis you can buy T-Shirts and Hats Example: Think of the range of products that apple has
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Price
Marketing is responsible for establishing the price of their service/product Must consider the costs of all the inputs (materials, labour, etc) Mark-up Price How much profit do you want to make on every product/customer Example: Selling Cupcakes
Every cupcake uses RM1 of materials and labour roughly costs RM0.25 to make one muffin You must charge at least RM1.25 to break-even
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Price
The price of your product or service tells the customer a lot about your product

rm50

rm1550

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Price
Different Pricing Strategies
Competition basing your prices on those of the competition Penetration making your price low while new just to get some business Bundle putting the product/service with another item and bundling the prices Psychological making the price say something about the quality of your product
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Place
Simply refers to how & where you are going to sell the product to the consumer Direct Distribution selling your product directly to the consumer Indirect Distribution sold through a 3rd party
What retailers are the best for reaching your Target Market?

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Place
For a service : where are you going to locate in order to best reach your target market You want to be in an area that
your target market frequents Says something about your business

Notice how car dealerships are always at the side of the main road

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Promotion
A successful product or service means nothing unless the benefit of that product/service can be communicated to the Target Market

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Public Relations

Advertising

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Sales

Buzz

Patents, Trademark And Copyright

PATENTS
A patent is a form of legal protection for an invention. They afford inventors with property rights that are intended to prevent anyone else from making, using, or selling the patented invention.

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TRADEMARKS
A trademark is used to protect a word, symbol, device, or name that is used in commerce. The purpose of a trademark is to distinguish the products of one source, such as a company, from those of another. Although an individual can trademark something, the are usually applied for by businesses or legal entities. At its most basic, a trademark may be thought of as protection for a brand name
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COPYRIGHT
A copyright protects a wide range of creative or intellectual work. This includes written works as well as dramatic, musical, and artistic creations. Some items covered by copyright include movies, songs, books, sculptures, and computer software.

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WHAT ABOUT BRAND?FIND IT OUT

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